The ultimate aim is to cut air pollution but the goal in one number is to build 18 gigawatts of new wind generation capacity this year. The figure is part of the National Energy Administration’s 2014 push to speed up industry development, one of the NEA’s top priorities.
It could all translate into 60 billion yuan (US$9.7 billion) in new orders, according to business news website Yicai.com. Add that to the long list of projects approved but not yet started or finished and it’s looking like a bumper two years ahead for equipment suppliers, a China Securities Journal report says.
Among the wind farm operators and equipment makers expected to expand their installation capacity by 40-60 percent this year are China Longyuan Power Group (00916.HK), Huaneng Renewables (00958.HK) and China Datang Corp Renewable Power (01798.HK), Xinjiang Goldwind Science and Technology (02208.HK) and China High Speed Transmission Equipment (00658.HK). No wonder the main players are riding higher.
The wind power industry is not just recovering in volume terms, it is also showing two other signs of health. First, better grid construction and coordinated planning means more wind farms are operating at top speed. On average, wind generators worked at full capacity for 2,080 hours last year, the highest level since 2008. Second, the curtailment rate, which measures how often wind farms operate at below their generation capacity, has fallen from 17 percent in 2012 to 11 percent last year.
The sector went through some painful consolidation in 2011 and 2012, with the number of major wind generator makers in the country dropping from 80 in 2011 to 30 now. The fall in the number of players and improvement in demand outlook means less pressure for price competition.
Last year, China added 14.49 million kilowatts of on-grid wind power generation capacity, and total generation capacity topped 77 million kW, a 23 percent rise from 2012.
Based on the location of the new projects, two major groups of equipment suppliers will be the biggest beneficiaries, according to the Journal.
The newspaper quoted a China Merchants Securities analyst as saying that big wind farms are a thing of the past so low-wind-speed places like central, eastern and southern China will open new fronts in the market in the next few years. Investors should pay more attention to small equipment manufacturers like Xiangtan Electric Manufacturing (600416.CN), China Ming Yang Wind Power (MY.US), Shanghai Electric Group (02727.HK) and Titan Wind Energy Suzhou (002531.CN).
But Xinjiang still has the upper hand in ultra-high voltage power transmission lines, which help wind generators perform at their peak. Local manufacturers like Goldwind Science and Technology and Shanghai Taisheng Wind Power Equipment (300129.CN) will no doubt win from this.
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